Nice Australian Refinery Closure Attributable to Hostile Authorities Coverage – What’s Flawed With It?
Guest essay by Eric Worrall
Despite desperate last-minute subsidy offers from the federal government, one of the last remaining oil refineries in Australia along with a number of dependent industries is closing due to years of political hostility to manufacturing and petrochemicals.
Closure of the refinery in Altona for the entire industry
Angela Macdonald-Smith
Chief Resource Writer
Updated February 10, 2021 – 7.29 p.m., first published at 10.19 a.m.
Fears are growing that the closure of ExxonMobil’s Altona oil refinery will trigger a domino-like series of closings by petrochemical companies in western Melbourne, resulting in the loss of up to 2,000 jobs, as well as critical manufacturing capacity and fuel safety.
About 300 jobs are directly affected by the closure, which the US major confirmed on Wednesday. However, the indirect impact on administrators, contractors, and manufacturers relying on the 72-year-old refinery means the effect will be much broader. Australian Workers’ Union National Secretary Daniel Walton said.
Steve Bell, general manager of base plastics maker Qenos, which uses LPG from the Exxon facility, acknowledged the shutdown concerns extend well beyond power generation.
“As manufacturers and unions have determined, this is also about jobs, the economy and the future of energy-intensive, value-adding manufacturing in this country,” said Bell.
He said the decision – made in spite of the subsidies offered by the Morrison administration – reinforced the need for Canberra to get policies right on gas in order to secure competitive prices for manufacturers and protect jobs.
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“Australia’s fuel safety, which has been low for many years, is now close to zero,” tweeted Tennant Reed, policy advisor for the Australian industrial group. “If anything ever hinders the freedom of the seas, we’ll toast.”
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Read more: https://www.afr.com/companies/energy/fears-for-fallout-from-altona-refinery-closure-20210210-p5714n
The Altona refinery closure will leave Australia with three working oil refineries, up from eleven a few decades ago, and massive reliance on fuel imports. Any disruption to shipping, such as the start of a military conflict in the South China Sea, would paralyze the Australian economy and likely result in a rapid deterioration in Australia’s defense capabilities.
What caused all of these refineries to close? As far as I can tell, the main culprits have been a hostile regulatory environment such as Victorian government restrictions on fracking and exploration, rising compliance costs, and crude oil supplies to Australian refineries.
With compliance costs rising and volumes falling, there was no point in keeping the refineries open. The closure of the refineries in turn triggers a domino series of closings of dependent industries, many of which were adjacent to the refineries. Companies that rely wholeheartedly on the steady flow of petroleum products from the refineries to function.
The same scenario could easily play out in the US over the next few years. Biden has already tried to curb the supply of crude oil to U.S. refineries after lifting drilling bans on Keystone and Federal.
The easiest way for companies to protect their oil refineries from the promised wave of punitive environmental regulations and carbon taxes is to move the refineries and possibly the company headquarters overseas, out of reach of the US federal regulators, and then the US to gasoline until then starve The profit from rising prices offsets the taxes and costs imposed by Biden.
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